7 signs your local real estate market may be slowing
NEW YORK – Jan. 16, 2019 – As markets begin to cool throughout the country, shoppers are beginning to see more houses become available. However, all real estate is local, and individual markets could be slowing, growing hotter or simply remaining stable.
What should an agent say at a listing presentation when a seller asks about the local market? Dana Bull, a Boston-area real estate professional who specializes in millennial and first-time buyer clients, offers seven things to consider when analyzing the future direction of a market:
- Increased days on the market
The buying market is becoming less competitive as demand decreases and homes sit on the market a little longer. Help your sellers price their properties correctly by using the MLS to track how days on market correlates with price points in your area.
- Price cuts
Sellers who can't get their original asking price are beginning to make price reductions, another telltale sign of a slowing market, Bull says. This may benefit buyers who have previously been priced out of certain areas.
- Lower absorption rates
When supply is exceeding demand, it's a good time for you and your buyers to start looking for price reductions, Bull says. To quickly calculate the absorption rate in your area, divide the number of homes sold in a given month by the total number of homes available during that month.
- Decreased home value growth
Agents should regularly track this statistic on behalf of their clients. Tracking average price changes is one way to quickly spot overall trends in a local market. Selling prices may be up 1 percent this month, but they were up 1.5 percent last month and 2 percent the month before, it suggests that home value increases are beginning to slow.
- Higher inventory levels
An increase in inventory means the market is slowing, Bull says – but it also means home shopping will be less competitive for buyers.
- New construction
New builds increase inventory and are a sign that the market is opening up for buyers.
- Slowed investor activity
New investors gained confidence when the market was hot and seasoned investors were finding opportunities to sell. However, a slowdown in investor buying and selling activity is indicative of a waning market.
Source: Dana Bull
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